What is a mortgage refinance?

A refinance allows you to pay off your old loan and replace it with a new mortgage at a new term and a new rate. This can lower your monthly payments and potentially allow you to pay off your mortgage faster.

How do mortgage refinance rates work?

Mortgage interest is simply how much you pay a lender to borrow its money. If you’re taking out a $100,000 mortgage, you’ll pay back more than $100,000 over time for the privilege. Shorter-term loans usually have lower interest rates than longer-term ones, but their monthly payments are typically higher. For example, a 15-year mortgage will be a lot less expensive overall than a 30-year one because you’ll pay less interest, but you’ll have to pay more each month because of the shorter repayment window. That can squeeze your monthly budget. Read more: How refinancing a mortgage works

What are the requirements for refinancing a mortgage?

To refinance your existing loan, you’ll need to meet strict requirements, provide a bunch of paperwork and ensure you’ve built up enough equity in your home, especially if you want to take cash out. Here are some of the things your lender will likely want to see: Identification Tax returns Proof of assets, including bank statements and brokerage account statements Requirements vary, so talk to your lender about their credit score standards and the sorts of documentation you need to supply early. The sooner you can submit your documents, the faster you’ll get to closing. Read more: Questions to expect from lenders You’ll also need to make sure you have enough equity for the kind of loan you’re considering. For a cash-out refinance, most lenders require that you have a minimum of 20 percent equity in your home. For a rate-and-term refinance, the equity requirement will vary by lender, but you’ll most likely need to continue paying PMI, even after a refinance, if your new loan is worth more than 80 percent of your home’s total value. Read more: How to refinance your mortgage

Are mortgage rates different for those looking for a refinance?

Refinance and purchase loans typically have the same rate. Borrowers might notice slightly higher refinance rates when they’re in demand. Experts don’t recommend trying to time the market — in other words, waiting for rates to drop — as there are so many variables that can affect rates, making it difficult to accurately predict whether they’ll rise or fall. If you find a rate that will save you money, then it’s a good idea to lock it in so you don’t risk missing out if rates jump.

What are the different types of refinancing?

Rate-and-term refinance Requirements vary, so talk to your lender about their credit score standards and the sorts of documentation you need to supply early. The sooner you can submit your documents, the faster you’ll get to closing. With a rate-and-term refinance, borrowers can reduce their interest rate, lower their monthly payments (by extending their loan or through that new rate, or both) or shorten their term (which usually raises monthly payments) in order to pay off the loan faster. Cash-out refinance A cash-out refinance allows you to tap your equity by refinancing your mortgage. Because you're withdrawing cash from your home’s value, the new mortgage amount will be higher than your current loan. Lenders typically limit cash-out refinances to no more than 80 percent of your home’s value so that you still have some equity left in your home. Sometimes lenders will also charge higher interest rates because the loan amount is increasing. Between a larger mortgage and higher interest rate, make sure you run the numbers before you try to cash out. Cash-out refinances can meet many financial needs, such as financing home improvements, consolidating high-interest debt or paying for a child’s college education. Streamline refinance A streamline refinance is a product for government-backed loans. The advantage of streamline refinancing is that there are minimal credit requirements and the loan processing is typically fast. A streamline refinance can also be less expensive than conventional refinancing. Some lenders offer streamline refinances with no upfront costs wherein the lender will pay some or all of the closing costs in exchange for a higher interest rate. Read more: Types of refinancing

How much does refinancing cost?

Closing costs for refinancing your mortgage can run thousands of dollars, usually between 2 percent and 5 percent of the loan amount. These costs also vary by where you live, as origination fees, third-party fees and taxes differ by city and state. Read more: Cost to refinance

Is now a good time to refinance?

Although mortgage rates have been on an upward trend this year, they started out at record lows, and are still very low by historical standards. The Fed’s latest response to inflation pressures has broad economic implications, but it has a limited impact on fixed mortgage rates. For homeowners who now have significant equity thanks to rising home values, it’s worth exploring a cash-out refinance while rates are still relatively attractive. Read more: Bankrate's guide on when to refinance your mortgage

Is it worth it to refinance your mortgage?

While rates are rising, they remain historically low, so it can still be worth it to refinance. The answer depends totally on the numbers — no guesswork involved. It’s all a matter of when the savings outweigh the costs. Bankrate’s mortgage refinance calculator will run the numbers for your specific mortgage rate and term and give you the exact number of months it will take to break even and start saving. If you’d rather not crunch those numbers just yet, you can be pretty sure you’ll save money with a mortgage refinance if you shave 1 percentage point or more off your current mortgage rate. Also, figure that to get the best rate, you’ll need to have a credit score of 740 or higher and have enough equity in your home (at least 20 percent) to avoid the cost of PMI. Here’s a quick look at why people refinance their mortgage: Saving money on interest costs by lowering your monthly payment and or the term (number of years) you pay the loan Getting rid of an adjustable-rate loan, which have less stable monthly payments as rates rise and fall Raising cash to pay for home improvements or fund college for your kids Taking advantage of a lower rate if your credit has improved since you first took out your loan Calculate your savings: Bankrate's mortgage refinance calculator

Compare Today’s Refinance Rates

Written by

Jeff Ostrowski

Reviewed by

Greg McBride, CFA

On Friday, September 30, 2022, the national average 30-year fixed refinance APR is 6.85%. The average 15-year fixed refinance APR is 6.08%, according to Bankrate's latest survey of the nation's largest refinance lenders.

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money.

National mortgage rate trends
Current refinance rates
How to refinance your mortgage
Why compare mortgage refinance rates?
Pros and cons of refinancing
Should you refinance your mortgage?
Mortgage refinance FAQs

About our Mortgage Rate Tables: The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our "Advertisers"). Other lenders' terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a "Next" button that can be used to click-through to the Advertiser's own website or a phone number for the Advertiser.

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Weekly national mortgage rate trends

Current refinance rates

	30 year fixed refinance	6.83%
	15 year fixed refinance	6.01%
	10 year fixed refinance	6.09%
	5/1 ARM refinance	5.17%

Current mortgage refinance rates

Refinance rates change all the time, driven by factors like the economy, Treasury bond rates and demand. Lenders nationwide provide weekday mortgage rates to our comprehensive national survey of the most current rates available. The interest rate table below is updated daily. Use these as a guide to what's available, but keep in mind your rate may vary depending on your qualifications and the lender you choose.

While rates on 30-year fixed mortgage refis averaged over 5 percent as of early June, it’s still possible to find lower rates using our rate tables, which are lower than the national average. You can still find lower 15-year refinance rates, as well.

Another tactic is to pay points upfront, which reduces your interest rate. This can be more advantageous financially the longer you plan to stay in the home.

Product	Interest Rate	APR
30-Year Fixed Rate	6.83%	6.85%
15-Year Fixed Rate	6.04%	6.08%
5/1 ARM	5.16%	6.76%

Rates as of Friday, September 30, 2022 at 6:30 AM

How to refinance your mortgage in 5 steps

If you can get an adequately lower rate, refinancing can save you thousands of dollars a year, but it does require some work on your part. Here's a quick guide:

1. Check your credit score

A better credit score will help you secure a better rate and make your refinance even more cost-effective. If you're not happy with your credit score or the rates you're being quoted, work on boosting your credit first, then try to refinance again once you've improved it. Typically, mortgage lenders want to see a credit score of 620 or better for a refinance, but there are some refinance options if you have poor credit, including streamline programs.

2. Figure out how long it will take you to break even

One of the most important factors in refinancing is figuring out your break-even timeline. A refi usually comes with upfront costs at the closing, just like an initial mortgage, and those can be thousands of dollars or more. If you're not planning to stay in your current home for more than a few years, the savings you get from a lower rate might not outweigh those costs before you move. Bankrate's refinance calculator can help you figure out this timeline.

3. Compare the best refinance lenders

It's just as important to shop around when you refinance as it is when you're applying for your purchase mortgage. If you're refinancing to save money, you want to make sure you're getting the best possible deal. Check out Bankrate's lender reviews to help make your decision.

Read more: Best mortgage refinance lenders

4. Get your paperwork in order

Once you've identified your lender, find out what paperwork you need in order to complete a refinance application. Your lender will want to review tax returns, pay stubs, W-2s and other proof of income, as well as documentation about any assets such as savings.

5. Be patient

Refinancing isn't quite as hard as shopping for a house, but it still takes some time. While your loan is processing, don't open new credit accounts or make other large purchases until the new mortgage closes. Doing so can derail your application.

Read more: Guide to refinancing your mortgage

Why compare mortgage refinance rates?

Shopping around for quotes from multiple lenders is key for every mortgage applicant. When you shop, consider not just the interest rate you’re being quoted, but also all the other terms of the loan. Be sure to compare APRs, which include many additional costs of the mortgage not shown in the interest rate. Some institutions may have lower closing costs and fees than others, or your current bank or credit union may extend you a special offer. Don’t be afraid to walk away from your current lender when you refinance. If you can find a better deal elsewhere, go for it. Look at quotes from online and traditional banks. Consider using a mortgage broker, who will be able to provide rates from wholesale lenders.

Read more: How to get the best refinance rate

Pros and cons of refinancing

Refinancing can be a smart move, whether it helps you secure a lower rate or tap your home equity to fund a home renovation or other project through a cash-out deal.

Pros

You can lock in a lower rate by refinancing, which should make your monthly payments lower and give you some money back in your budget.
If your home’s value has risen, you might be able to stop paying private mortgage insurance (PMI), which will also lower your monthly expenses. PMI should end automatically once you get to at least 20 percent equity owned free and clear, but it’s usually a good time to consider a refinance once that happens, too.
If you need money for renovations, a cash-out refi offers relatively cheap capital. It can make your monthly payments more expensive, but home improvements boost your equity value even more.

Cons

Refinancing costs money. Closing costs can total 2 percent to 5 percent of the amount of the mortgage, which is why it’s so important to make sure you’ll recoup those costs before you move.
If you refinance from a 30-year loan to another 30-year loan, you’ll extend your repayment period. A new loan restarts the repayment clock.

Read more: Pros and cons of refinancing

Should you refinance your mortgage?

You should refinance if doing so will help you to save money, build equity or pay off your mortgage faster. For example, if interest rates have dropped since you closed your mortgage, you could do a rate-and-term refinance to obtain a lower rate. In addition to a lower rate, you could save by eliminating PMI, or tap your home’s equity via a cash-out refinance.

Mortgage refinance FAQs

Mortgage interest is simply how much you pay a lender to borrow its money. If you’re taking out a $100,000 mortgage, you’ll pay back more than $100,000 over time for the privilege. Shorter-term loans usually have lower interest rates than longer-term ones, but their monthly payments are typically higher. For example, a 15-year mortgage will be a lot less expensive overall than a 30-year one because you’ll pay less interest, but you’ll have to pay more each month because of the shorter repayment window. That can squeeze your monthly budget.

Read more: How refinancing a mortgage works
To refinance your existing loan, you’ll need to meet strict requirements, provide a bunch of paperwork and ensure you’ve built up enough equity in your home, especially if you want to take cash out. Here are some of the things your lender will likely want to see:
- Identification
- Tax returns
- Proof of assets, including bank statements and brokerage account statements
Requirements vary, so talk to your lender about their credit score standards and the sorts of documentation you need to supply early. The sooner you can submit your documents, the faster you’ll get to closing.

Read more: Questions to expect from lenders

You’ll also need to make sure you have enough equity for the kind of loan you’re considering. For a cash-out refinance, most lenders require that you have a minimum of 20 percent equity in your home. For a rate-and-term refinance, the equity requirement will vary by lender, but you’ll most likely need to continue paying PMI, even after a refinance, if your new loan is worth more than 80 percent of your home’s total value.

Read more: How to refinance your mortgage
Refinance and purchase loans typically have the same rate. Borrowers might notice slightly higher refinance rates when they’re in demand. Experts don’t recommend trying to time the market — in other words, waiting for rates to drop — as there are so many variables that can affect rates, making it difficult to accurately predict whether they’ll rise or fall.

If you find a rate that will save you money, then it’s a good idea to lock it in so you don’t risk missing out if rates jump.
Rate-and-term refinance

Requirements vary, so talk to your lender about their credit score standards and the sorts of documentation you need to supply early. The sooner you can submit your documents, the faster you’ll get to closing.

With a rate-and-term refinance, borrowers can reduce their interest rate, lower their monthly payments (by extending their loan or through that new rate, or both) or shorten their term (which usually raises monthly payments) in order to pay off the loan faster.

Cash-out refinance

A cash-out refinance allows you to tap your equity by refinancing your mortgage. Because you're withdrawing cash from your home’s value, the new mortgage amount will be higher than your current loan. Lenders typically limit cash-out refinances to no more than 80 percent of your home’s value so that you still have some equity left in your home.

Sometimes lenders will also charge higher interest rates because the loan amount is increasing. Between a larger mortgage and higher interest rate, make sure you run the numbers before you try to cash out.

Cash-out refinances can meet many financial needs, such as financing home improvements, consolidating high-interest debt or paying for a child’s college education.

Streamline refinance

A streamline refinance is a product for government-backed loans. The advantage of streamline refinancing is that there are minimal credit requirements and the loan processing is typically fast. A streamline refinance can also be less expensive than conventional refinancing. Some lenders offer streamline refinances with no upfront costs wherein the lender will pay some or all of the closing costs in exchange for a higher interest rate.

Read more: Types of refinancing
Although mortgage rates have been on an upward trend this year, they started out at record lows, and are still very low by historical standards. The Fed’s latest response to inflation pressures has broad economic implications, but it has a limited impact on fixed mortgage rates. For homeowners who now have significant equity thanks to rising home values, it’s worth exploring a cash-out refinance while rates are still relatively attractive.

Read more: Bankrate's guide on when to refinance your mortgage
While rates are rising, they remain historically low, so it can still be worth it to refinance. The answer depends totally on the numbers — no guesswork involved. It’s all a matter of when the savings outweigh the costs. Bankrate’s mortgage refinance calculator will run the numbers for your specific mortgage rate and term and give you the exact number of months it will take to break even and start saving.

If you’d rather not crunch those numbers just yet, you can be pretty sure you’ll save money with a mortgage refinance if you shave 1 percentage point or more off your current mortgage rate. Also, figure that to get the best rate, you’ll need to have a credit score of 740 or higher and have enough equity in your home (at least 20 percent) to avoid the cost of PMI.

Here’s a quick look at why people refinance their mortgage:
- Saving money on interest costs by lowering your monthly payment and or the term (number of years) you pay the loan
- Getting rid of an adjustable-rate loan, which have less stable monthly payments as rates rise and fall
- Raising cash to pay for home improvements or fund college for your kids
- Taking advantage of a lower rate if your credit has improved since you first took out your loan
Calculate your savings: Bankrate's mortgage refinance calculator

Written by: Jeff Ostrowski, Senior Mortgage Reporter for Bankrate

Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.